Westfield Corp. today posted net profits of $1.37 billion, calculated in accordance with international financial reporting standards for the 12 months ending Dec. 31. Funds from operations were 33.7 cents a security with a distribution of 25.1 cents, in line with the company’s forecast. Comparable net operating income growth was 3.2 percent, with flagship properties posting a 4 percent gain.
The Westfield Corp. portfolio was leased at a rate of 94.4 percent, down 100 basis points, while the flagship portfolio was leased at 96 percent, a decline of 60 basis points.
The real estate investment trust said it made significant progress on its $9.5 billion development program last year with the opening of the $1.2 billion major stage of Westfield World Trade Center in lower Manhattan. A $1.1 billion expansion of Valley Fair mall in San Jose, Calif., was started and there were solid gains on the $1 billion redevelopment of Century City in Los Angeles. UTC in San Diego is undergoing a $600 million expansion.
Westfield London’s $750 million expansion is running six months ahead of schedule, the company said. When it’s finished in the first half of 2018, it will be the largest shopping center in Europe. Construction on Westfield Milan will get underway in 2018.
Westfield Corp. has $3.7 billion worth of projects under construction in the U.S. and Europe.
Westfield Group in 2014 split into Northern Hemisphere and Australia, a move that created Westfield Corp. to own and manage assets in the U.S. and Europe, and Scentre Group for Australia and New Zealand.
Like other REITs, Westfield believes that building residential properties in close proximity to its malls will create a captive audience of shoppers. Residential rental units are in predevelopment at Westfield Stafford City in London, where a 1,200-unit apartment project is set to begin construction in 2018. A 300-unit residential project is planned at UTC in San Diego.
Net property income in 2016 was $795 million, a 5.9 percent increase over 2015. Management income declined 7.8 percent to $33 million from $37 million in the prior year, and gross income dropped 10.8 percent to $921 million from $1.03 billion in 2015. Earnings before taxes declined 12.1 percent to $722 million from $822 million in 2015. Westfield ended 2016 with total assets of $21.11 billion, compared to $20.01 billion in the previous year’s period, and total liabilities of $11.28 billion versus $10.45 billion in 2015.
For 2017, Westfield expects funds from operations of 33.8 cents to 34 cents per security after lost income from redevelopment projects, which represents pro forma growth of 3 percent to 3.5 percent from 2016, and distribution of 25.5 cents per security.